Jelf Employee Benefits has given its initial thoughts on the chancellor’s 2014 Autumn Statement. The company is seeking to isolate the sections of the speech (and the supporting document) that are relevant to the employee benefits debate. The first such area is pensions related.
It’s really clarification of something that we were aware of anyway, but good news in so much as it removes another perceived barrier to saving in the UK, thus making workplace savings even more valuable to the end user.
The chancellor said: ‘From next April, we will trust people with control over their own pensions. In this Autumn Statement, I confirm that the 55 per cent death tax that currently applies when you pass an unused pension pot on to your loved ones will be abolished.
‘People will be able to pass on their pensions to their loved ones tax free.
Sign up to our newsletters
Receive news and guidance on a range of HR issues direct to your inbox
‘I can also tell the House today that we will ensure that people who die before the age of 75 with a joint life or guaranteed term annuity can pass that on tax free too.
‘And next week we will publish the market-leading rates on our new 65-plus pensioner bonds, which will be available from January.
‘Our £15,000 New ISAs are hugely popular with savers too. Next April, we will increase the limit to £15,240.
‘But, Mr Speaker, we will do something more.
‘At the moment, when someone dies, the savings in their ISA lose their tax-free status and their spouse starts paying tax on that money.
‘From today, I can announce that when someone dies, their husband or wife will be able to inherit their ISA and keep its tax-free status. Pass on your ISA tax free. Pass on your pension tax free.’
Some positive news there. This might also be perceived as another small step towards levelling the playing field between pensions and ISAs.
There will be more on the statement as we work through the speech and documents.